Arrow Trading Corporation & Anr. v. Punjab National Bank .

Dr. Motilal B. Naik, Chairman:— These two appeals are taken up together for consideration as the issue involved in these two appeals is one and the same, and are disposed of by the following common order:

On the basis of the submissions made by Mr. Joginder Sukhija, the learned Counsel for the appellants, it would appear that in the pending O.A 9/2003 and O.A 8/2003 these appellants moved I.A 276/2004 and LA. 277/2004 respectively seeking summoning of Dr. P.S Chawla, a resident of Delhi for proving a case against the respondent herein. The said two applications came up for consideration before the Tribunal, and the Tribunal, by two similar orders, dismissed the said applications on the ground that no case has been made out for granting such permission. The present appeals have been filed against those orders.

2. At the threshold the Counsel for the respondent Bank raised a preliminary objection as to the maintainability of the appeal on the ground that all the parties have not been arrayed as respondents in these appeals. To this objection, the learned Counsel for the appellants brought to my notice the procedure contemplated under the DRAT Procedure Rules, particularly, the Rule 15 of the Rules, and stated that in view of the said Rule 15 the other parties are not necessary, and that only the Bank/financial institution is a necessary party and, as such, only the Bank has been arrayed as the respondent.

3. Though the learned Counsel for the respondent Bank contended that the rules cannot be interpreted in a narrow compass, I am of the view that this objection raised by the learned Counsel for the respondent Bank need not be considered as a serious objection as the appellants could be permitted to correct the cause-title arraying the other respondents, and can say no relief is claimed against such and such respondents.

4. Incidentally, Mr. Ahluwalia, the Counsel for the respondent Bank, stated that in view of the ratio laid down by the Division Bench of the Hon'ble Patna High Court in Kavita Pigments and Chemical (P) Ltd. v. Allahabad Bank, AIR 2001 Patna 66, the appellants are under obligation to make the pre-deposit of 75% of the debt determined, as provided under Section 21 of the Act. Counsel stated that the appeals cannot be entertained unless the provisions contained in Section 21 of the Act are complied with.

5. When confronted with this position, the learned Counsel for the appellants placed before me the order of the learned Single Judge of the Hon'ble Patna High Court, which was the subject matter of appeal before the Division Bench of the Hon'ble Patna High Court, and stated that the learned Single Judge while discussing the provisions of section 21 of the Act, has categorically held that the condition of pre-deposit would not apply in all cases. Counsel stated that the Hon'ble Division Bench dismissed the appeal confirming the judgment of the learned Single Judge. In other words, according to the learned Counsel for the appellants, the ratio laid down in the decision of the learned Single Judge has been accepted by the Division Bench. Counsel also drew my attention to the decision of the Hon'ble Punjab and Haryana High Court in Sandeep Singh Sandhu v. Debt Recovery Tribunal, II (1999) BC 556, and the decision of the Hon'ble Allahabad High Court in Oswal Agencies, Tourist Lodge v. Recovery Officer, Debt Recovery Tribunal, Lucknow, III (2004) BC 78, and stated that the requirement under Section 21 would not apply to the facts of the case, and pleaded that the contention of the Counsel for the respondent Bank has to be rejected outright.

6. In order to appreciate whether Section 21 applies in the facts of the case it is necessary to record the provisions appearing in Section 21 of the Act, which read thus:

“Deposit of amount of debt due, on filing appeal.—Where an appeal is preferred by any person from whom the amount of debt is due to a Bank or a financial institution or a consortium of Banks or financial institutions, such appeal shall not be entertained by the Appellate Tribunal unless such person has deposited with the Appellate Tribunal seventy-five per cent of the amount of debt so due from him as determined by the Tribunal under Section 19:

Provided that the Appellate Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section.”

A reading of these provisions would show that the appeal shall not be entertained by the Appellate Tribunal unless the appellant has deposited with the Appellate Tribunal 75% of the amount of debt so due from him as determined by the Tribunal under Section 19

7. Section 20 is the provision which relates to the appeal to be filed before the Tribunal, which says: “(1) Save as provided in Sub-section (2), any person aggrieved by an order made, or deemed to have been made, by a Tribunal under this Act, may prefer an appeal to an Appellate Tribunal having jurisdiction in the matter; (2) no appeal shall like to the appellate Tribunal from an order made by a Tribunal with the consent of the parties; (3) every appeal under Sub-section (1) shall be filed within a period of forty-five days from the date on which a copy of the order made or deemed to have been made, by the Tribunal is received by him and it shall be in such form and be accompanied by such fee as may be prescribed.”

8. We are mainly concerned with Sub-section (1) of Section 20, which says that any person aggrieved by an order made, or deemed to have been made, by a Tribunal, may prefer an appeal to the Appellate Tribunal. Under the scheme of the Act, when orders are passed by the Tribunal. Such orders are appealable under Section 20 of the Act, before the Appellate Tribunal. Though appeals are filed under Section 20 of the Act against any order passed by the Tribunal, the liability of pre-deposit under Section 21 would be attracted only when an appeal is filed against an order determining the liability. In other words, it could be said that when a liability is determined by the Tribunal, aggrieved party can invoke jurisdiction under Section 20 of the Act. Such party shall be subject to the conditions imposed under Section 21 of the Act. Other than such an order is appealed, in my considered view, the provisions under Section 21 are not attracted. Though the learned Counsel for the respondent Bank, relying upon the decision of the Hon'ble Patna High Court cited supra pleaded that in any appeal filed under Section 20 the conditions imposed under Section 21 are attracted, I think, if this view is accepted, it would amount to stretching too much the provisions appearing in Section 21 of the Act, which says that when appeal is filed against the determination of liability then only provisions of section 21 will be attracted.

9. Let us take a case falling under a different category. Say, an ex parte decree is passed against the defendants. The defendants filed a petition under Order 9 Rule 13 of CPC seeking to set aside the ex parte decree, and such a petition is dismissed by the Tribunal, the aggrieved party shall be entitled to file an appeal against that order, under Section 20 of the Act only. When such an appeal is filed against the dismissal of the petition filed under Order 9 Rule 13, although there is a determination of liability against that party on account of an ex parte decree, it shall be noted that the appeal is not preferred against the determination of liability or against an ex parte decree, but is preferred against the order of dismissal of the petition. The provisions of section 21, as repeatedly noted by me, would be attracted only when an order of determination of liability is challenged. Therefore, in my considered view, the provisions under Section 21 cannot be read as if when an appeal is filed against any order invoking Section 20, the provisions of section 21 apply.

10. Admittedly, the facts of the present case disclose that the O.A proceedings are still pending before the Tribunal. When applications were filed seeking summoning of witnesses, those applications were rejected for some reason, which promoted the parties to prefer an appeal before this Court invoking the provisions of Section 20 of the Act. In the facts of the case, I think, the submissions made by the learned Counsel for the respondent Bank that in view of the law laid down by the Hon'ble Patna High Court in Kavita Pigments and Chemical (P) Ltd. v. Allahabad Bank (supra) the appellants are liable to comply with the provisions of section 21 of the Act, is unsustainable.

11. On perusal of the order impugned, it appears to me that since the appellants have given cogent reasons while seeking summoning of Dr. P.S Chawla, the Tribunal, in my considered view, is not justified in rejecting the application. Accordingly the appeals are allowed, the impugned order are set aside.

12. Since the appeals are allowed, the Tribunal below shall permit summoning of Dr. P.S Chawla, a resident of Delhi, at the instance of the appellants, and fix a date for his appearance before the Tribunal. Since the Tribunal is now directed to permit summoning of Dr. P.S Chawla, let all the parties appear before the Court on 15.9.2005, on which date the matter shall stand posted. Thereafter, the Court shall fix a date for appearance of Dr. P.S Chawla, and proceed with the matter according to law.

Appeals allowed.